Invest Nova Scotia has earmarked $60 million to join private sector investment funds as a limited partner, reallocating money that was previously set aside for loans.

In an interview, CEO Peter MacAskill said a maturing startup ecosystem with changing needs is a key reason the agency has transferred the money via a provincial Order in Council. The capital has been shifted from the agency’s longstanding Nova Scotia Fund, which had not been used in “maybe 10-plus years,” to the similarly named Nova Scotia First Fund, which will partner with private sector investors in a bid to more-effectively leverage public dollars.

MacAskill’s team has also issued a call for VCs to apply for backing, with intake to occur on a rolling basis and the funds to be handed out over several years. The agency will invest up to $10 million in any one fund, to a maximum of 25 percent of the total fund value.

“Our ecosystem is maturing,” said MacAskill. “We see it as a really good opportunity for the ecosystem to continue that evolution, to have more venture capital resources here — to use our fund to leverage the growth of those resources.”

MacAskill, who became Invest Nova Scotia CEO last year, said private VC funds can often leverage government backing to secure even more capital from other sources.

This is not the first time the provincial government has partnered with private investors. In its previous guise as Innovacorp, Invest Nova Scotia was an LP in several private VC funds, such as Build Ventures and Sandpiper Ventures. But when it did so in the past the agency assessed deals on a case-by-case basis. Now, the process will be more structured. And investment shops that previously received funding from Innovacorp can still apply.

“They will be getting money from other sources,” MacAskill said. “So they can go in and invest in more companies, diversify their portfolio … So there’s a risk-mitigating factor there, as well.

“It enables the provincial contribution to go that much further.”

As of March 2023, there was just under $40 million in the Nova Scotia First Fund, with its portfolio companies reporting just under $100 million in revenue, an increase of nearly a third compared to the previous year.

“The Nova Scotia Fund portfolio currently has approximately $25.9 million (of loans) outstanding to 12 companies located throughout the province,” said the agency in its 2024-2025 business plan. “The annual portfolio lending cap is set at $100,000 for fiscal 2024-25 solely for the purposes of realization costs.

“The Nova Scotia Fund has not issued new business development incentives since fiscal 2014-2015. The current regulations for the Nova Scotia Fund prohibit new business development incentives.”